On the 22th of March 2017, New details arose of the “The Laundromat Scheme” that surfaced in 2014. The scheme moved 20.8 billion USD out of Russia from 2010 to 2014. The international scheme involved over 500 people and Russia used connections in Moldova and Latvia to set up banks to move the money across the world.
How did one of the largest laundering schemes of the century take place?
On the 22th of March 2017, New details arose of the “The Laundromat Scheme” that surfaced in 2014. The scheme moved 20.8 billion USD out of Russia from 2010 to 2014. The international scheme involved over 500 people and Russia used connections in Moldova and Latvia to set up banks to move the money across the world. London has now been declared one of the main places through which most of the money was moved through “hub companies”. The world’s top banks such as HSBC and the Royal Bank of Scotland have had money laundered through them.
How did the Scheme work?
The Organized Crime and Corruption Report obtained a report which outlined what took place and who was involved. Various members of the Russian elite from industry oligarchs to members of the political bodies have said to be involved.
The scheme involved the setting up of two shell companies abroad. These two shell companies only existed on paper and had no staff or any actual base. One company acted as a loaner to the other company. Company ‘A’ or the loaner would lend non-existent money to Company ‘B’ and then let the company default on their credit.
The companies were registered under Moldovan jurisdiction. This meant the Russians involved could bribe the judges to declare the debt authentic and then allow Russians to use the channel of the banks to send money to ‘pay off’ the debt. The account where all the money was sent to was in the Moldindconbank which is the central bank of Moldova.
Once there the money was either withdrawn or sent to Latvia which is in the European Union. From the Latvian bank Trasta Komercbanka, it was sent across the world through various shell companies and ‘hub companies’ such as the ones managed by HSBC etc.
Is this the tip of the iceberg?
The notions that money laundering exists solely in the larger economic systems such as Russia and China and have been unsubstantiated after the OOCP report. It shows that we live in the age where “Shadow Banking” systems can replace the normal one for people with enough political influence.
The complexities of the process are shown by multiple companies being set up for the purpose of laundering money. The “Panama Papers” uncovered just how many shell companies exist for this purpose and now we are seeing the methodology behind the schemes.
Investigators are now looking into both Latvian and Moldovan involvement in the scheme with many members of both banks being close to indicted. But this shows the reach of crime in the Internet age.
The unearthing of the “Laundromat” methodology is ominous for the global ecosystem as Russia seems leagues ahead in terms of using the cyber realm to their benefit. The recent FBI investigation into Russia cyberwarfare shows that they can threaten on any front, be it physically or through the internet.
The Russian Oligarchs at the center of the scheme will remain untouched unless the OOCP and other international organizations combine to find out where they invested the money or to whom it went to. The lack of any indictment over the Panama Papers could replicate itself in the chase for the Perpetrators of the Laundromat.